I'm sorry for what has happened to your cyberstorm :-(
I'm not sure about how the jumper has to be set I think that the right position is EXT, anyway if you don't set it correctly don't worry, your amiga simply won't boot, but the card won't be damaged.
Yes, you need to reinstall de 040 libraries (you can download one of the latest versions from
DCE you should overwrite the small 040 library that points to the 060 library. Well, you may rename them if you prefer it...
Remember to change libraries like the mpega.library and to use 040 versions of some 060-only programs you may have (anyway some of them work with the 040 because they don't use extra instructions). Yes, you can boot with a WB disk and do all that stuff...